BTC Rebounds 10% From Weekend Lows
The Bitcoin bull case strengthened significantly this week as BTC rebounded nearly 10% from its weekend lows. This week, the Bitcoin bull case grew because BTC went on a rebound of almost 10% since the weekend bottoms. At the moment of writing, the price of Bitcoin floats around $107,446.08 after the rapid improvement in risk sentiment.
The recovery was further supported by falling U.S. dollar strength, accompanied by greater investor confidence in traditional equities. Market participants are increasingly pricing in a July Fed rate cut, citing soft economic data. This macro switch provides fodder for renewed BTC bullish sentiment as traders look toward riskier assets for returns.
Dollar Index Hits Low Since February 2022
Supported by the TradingView data, the Dollar Index or DXY dropped to a low of 97.27 on Thursday-the lowest since February 2022. The drop came due to disappointing housing and consumer confidence figures emerging from the U.S. earlier in the week. Generally, a weak dollar improves liquidity and consequently favors growth in risk assets like Bitcoin and equities.
Bitwise’s Andre Dragosch explained in X: “Very bullish for the growth of the global money supply and Bitcoin”. With the liquidity situation in global markets turning for the better, analysts see asset prices–both digital and traditionally–moving higher. The dollar unwind in question lends strong support to the bull case for Bitcoin in Q3.
Nvidia Clocks Record Highs as It Grows Correlation to BTC
Nvidia closed up 4.33% at a record $154.30, continuing the tech-led rally. Interestingly, NVDA and BTC seem to be tracing very similar paths: both established their bottoms in late 2022. The 90-day correlation coefficient between NVDA and BTC currently stands at 0.80, indicating a very strong positive correlation.
The bullish golden cross was recently seen in Nasdaq futures, which supports the risk-on rally continuation expectations. Nvidia’s rally intensifies the broader market optimism as investor focus pivots onto AI and emerging tech. This sort of connection helps nourish the ongoing narrative around Bitcoin vs. Dollar Index dynamics being influenced by tech sentiment.
Recession Indicators Point to Easing Ahead
The US two-year Treasury yield dropped to 3.76%, the lowest since May 2, indicating easing expectations. Whereas meanwhile, the 10-year yield dropped to 4.27%, thereby entering a bull steepening yield curve. This bullish steepening scenario usually appears just before a recession when the short-term yields fall more rapidly than the long-term.
Wealth advisor Kurt Altrichter expressed that the Fed might be losing control at the short end of the curve. “If the 2Y breaks lower, that’s your cue. Watch it closely,” he warned on X. Giving more weight to the recession signals are these moves in the bond market, suggesting that Bitcoin is indeed a hedge.
A Shift In Consumer Confidence and Fed Expectations
Consumer confidence dropped to 93 last month, falling sharply by 5.4 points in the U.S. The expectations index dropped to 69, well below the 80-threshold signaling recession, according to the Conference Board. The sharp decline, marking chiefly Republican respondents, signals an increase in economic pessimism.
These soft data, combined with weak inflation and housing reports, encourage speculation on monetary easing. There has been increasing belief among traders that the Fed will cut rates to stimulate the economy as early as in July. Such easing acts as a strong support for the crypto markets and gives strength to the thesis of a Bitcoin bull case.
Also Read: Silver Price Forecast: XAG/USD Dips as Market Sentiment Shifts
Markets Price in July Rate Cut and More Easing
Traders are pricing four basis points of rate cuts at the July Fed meeting after being almost at zero last week. Bloomberg reports that rate cuts indicated by swaps stand at 60 basis points over the next four meetings. This has increased from 45 basis points just a week ago, signaling a quick change in sentiment.
Any drop in oil price and various measures of inflation will now make it look almost certain that the Fed is going to act sooner than anticipated. Rate cuts diminish the opportunity cost of holding assets such as Bitcoin and gold, which do not yield income. This changing macro landscape seems to have been pushing the narrative of BTC bullish sentiment.
